UC Retains Contract for Los Alamos

The University of California on Wednesday won its hard-fought battle to keep operating the Los Alamos National Laboratory, beating back a rival bid from a Lockheed Martin-University of Texas team despite repeated security and safety lapses at the vast nuclear weapons design center in New Mexico.

The U.S. Department of Energy announced that it was awarding the Los Alamos contract for at least seven years to the group headed by UC and its key new partner, Bechtel National, a unit of engineering powerhouse Bechtel Group.

The decision marked a face-saving victory for UC, which has run the lab since the facility began in 1943 as a secret Manhattan Project site to develop the atomic bomb. A loss would have cost UC not only a share of millions in annual management fees but also some of the prestige it uses to attract world-renowned physicists and other scientists interested in nuclear defense research.

UC’s management blunders over the last few years led to withering criticism in Congress and elsewhere about such things as classified computer disks reported missing and a student intern’s injury from being exposed to a laser.

In 2003, the Energy Department opened up the contract renewal to competitive bidding for the first time and, after six decades, UC’s involvement was threatened.

What turned around UC’s prospects appeared largely to be the corporate partners it brought in to form a new management and financial structure while keeping what many boosters said was UC’s superiority in physics, engineering and other research over the University of Texas. In addition, Lockheed Martin was perceived to have a potential conflict of interest because it already runs another national laboratory for nuclear weapons engineering.

At a Washington news conference Wednesday announcing the contract, worth $512 million in fees and expenses over the seven years, federal officials were careful to distance themselves from UC’s previous management. “This is a new contract with a new team marking a new approach to the management of Los Alamos. It is not a continuation of the previous contract,� Energy Secretary Samuel W. Bodman said.

“There has been quite a bit of turmoil and uncertainty over the past couple of years,� Bodman added. “Today’s announcement is designed to relegate that tumult to the past, to usher in a new era of invaluable cutting-edge science at Los Alamos.�

With a yearly budget of $2.2 billion, Los Alamos has a key role in advising Washington policymakers in the safety and reliability of the nation’s aging nuclear stockpile and whether new bombs and testing are needed. Its 13,000 employees work on classified facilities spread over 40 square miles in the high desert.

In an interview Wednesday, UC President Robert C. Dynes explained: “We’ve put together partners that can better cover some of the other things that we were not as good at as we should have been.�

“Our strength will be the science and the technology at the laboratories,� he said. “The other companies will supply other things, like nuclear security, overall security, financial management, personnel issues and things like that.�

UC’s victory, he said, stemmed from “the fact that we integrated what we heard the Department of Energy felt they needed, and it was clearly not the same old, same old.�

Along with Bechtel, UC is joined by BWX Technologies, a nuclear facilities manager, and the Washington Group International, which has expertise in security and other management services. The winning group will be governed by a 12-member board, headed by Gerald Parsky, chairman of the UC Board of Regents, with Bechtel executive Tom Hash as vice chairman.

Tom D’Agostino, the federal official responsible for making the contract decision for the Energy Department’s National Nuclear Security Administration, said the UC proposal prevailed based on its ability to provide science and technology, its key personnel, its organizational structure and its performance. The contract can be extended for up to 20 years in all.

“When you look at the complete package, what we ended up with was a technically superior proposal at the lowest cost,� he said. “In essence, it ended up as the best value for the taxpayer.�

A potential drawback for the Lockheed-University of Texas group was the fact that Lockheed already has the management contract for the Sandia National Laboratories, mainly in New Mexico and California. UC runs two other national labs, including one also involved in nuclear weapons design. But even with Los Alamos, the university’s labs lack the complete engineering capacity to create a nuclear bomb.

If Lockheed ran Los Alamos in addition to Sandia National Laboratories, one corporation would have “a monopoly over the design and engineering of complete nuclear warheads, something no company has today,� said Phil Coyle, a former assistant secretary of Defense and a onetime deputy director of Lawrence Livermore National Laboratory, a UC-run sister facility to Los Alamos.

Critics, however, were angered by the decision.

“I have minimal hope and no belief that UC can reverse its record of consistent failure,� House Energy and Commerce Committee Chairman Joe Barton, a Texas Republican, wrote in a letter to Bodman on Wednesday. He called for the Department of Energy to provide more documents by Jan. 6 detailing how the selection was made.

Danielle Brian, executive director of a group that has long been critical of UC’s handling of Los Alamos, the Project on Government Oversight, said: “What does it take for UC to suffer the consequences of screwing up? Lockheed wasn’t a great alternative, but it is hard to see how UC could possibly have been given a vote of confidence. We expect a continuation of the era of chaos at Los Alamos.�

The Lockheed-UT partnership, for its part, put out a short statement saying that it wished the UC team “every success with its new contract to manage one of the nation’s most important scientific institutions. We are thankful that the employees of the lab and their families have a decision.�

In the April 30, 2003, announcement that he was opening the Los Alamos contract to competition for the first time, then-Energy Secretary Spencer Abraham cited UC’s “systemic management failures.�

For months, the New Mexico laboratory had been shaken by allegations and revelations of theft, fraud, security lapses and lax oversight. The problems erupted into a public scandal after two investigators who had been hired by the lab to look into the allegations were fired and then went public with claims that their dismissals were part of a coverup. They were later rehired.

Despite the problems, Abraham said that he had decided not to break the contract immediately but to avoid disruptions by waiting for it to expire this year. He also said UC leaders had taken significant steps to remedy the problems at the time.

But the embarrassments continued. In July 2004, Los Alamos was shut down after two incidents -- the reported loss of two classified computer disks and a laser accident that injured an undergraduate intern -- and remained closed for the rest of that year. Investigators later concluded that the reportedly missing disks had never existed.

The lab’s closure for much of 2004 has been estimated to have cost the government up to $370 million, although the General Accounting Office said in a report this week that it may not be possible to calculate the total cost because of problems with the lab’s recordkeeping.

And just this week, five employees were exposed to plutonium during an inventory in a vault containing radioactive materials, although a Los Alamos spokesman described the incident as minor.

In Washington and elsewhere, last year’s extraordinary shutdown helped trigger a rebellion among some of the lab’s technical staff against Director G. Peter Nanos, a tough-talking former Navy admiral who had been brought in by UC in 2003 to fix the security and safety breaches. Nanos vowed to rein in what some called the lab’s cowboy culture; critics accused him of a management style that was highhanded and intimidating. He resigned in May.

Michael Anastasio, director of Lawrence Livermore National Laboratory, led the UC group’s effort to win the contract and is designated to become director at Los Alamos. Anastasio has won high marks for avoiding the management and security problems that have dogged Los Alamos.

Bodman said the selection of the winning group was put in the hands of D’Agostino and other career Energy Department employees. “There can be no hint of politics,� he said. UC boosters were particularly fearful of any political clout the University of Texas might have in a White House occupied by a former Texas governor.

Dynes said he received the news in a morning phone call Wednesday from D’Agostino.

“I said ‘Yahoo!’ I felt very good,� Dynes said.

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UC and Los Alamos

In 1943, the University of California was chosen to operate a laboratory in Los Alamos, N.M., as part of the secret project to build the atomic bomb. The university has continued to run the facility, now known as the Los Alamos National Laboratory, ever since. UC’s management of the lab has become controversial in recent years.

July 1979: UC regents reject Gov. Jerry Brown’s proposal to sever ties with the Los Alamos laboratory.

November 1989: A faculty committee declares that UC should not manage nuclear weapons labs because such secret research is at odds with academic freedom.

August 1991: A report from the General Accounting Office levels charges of waste and impropriety at three UC-operated laboratories.

March 1999: The FBI accuses Los Alamos scientist Wen Ho Lee of leaking nuclear secrets to China. Lee later pleads guilty to a single count of mishandling nuclear data and prosecutors dismiss the other charges.

November 1999: A UC report concludes that managers of the weapons labs had grown complacent about security as the Cold War thawed.

June 2000: Two computer hard drives with nuclear weapons data allegedly disappear from a Los Alamos vault. They are later found behind a lab copy machine.

January 2001: The U.S. Department of Energy extends its contract with UC to manage the Los Alamos and Lawrence Livermore laboratories.

January 2003: The Department of Energy reports the theft or loss of at least $1.5 million in government property at Los Alamos, including a computer hard drive and other electronic items. The report criticizes weak internal controls.

July 2004: Lab officials shut down Los Alamos for months, announcing that the disappearance of two computer disks had forced a halt to all classified research.

January 2005: A Department of Energy report finds severe security weaknesses at Los Alamos, but says two classified computer disks believed to be missing from the lab never actually existed.

May 2005: Regents at the University of Texas vote to bid for control of Los Alamos with Lockheed Martin Corp.

May 2005: Bechtel Group says it will join UC’s effort to retain control of the lab.

Wednesday: UC wins the contract to continue operating Los Alamos.

Sources: Los Angeles Times, Associated Press. Compiled by John Jackson

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Times staff writers Rebecca Trounson and Joel Havemann also contributed to this report.